Fees

Protocol fee

LayerCover takes a cut of positive yield at the tranche level. The default rate is 5% and the hard cap is 20% (MAX_PERFORMANCE_FEE_BPS). The fee is only charged on gains.

The fee is paid by minting value-backed junior shares to the configured fee recipient after the metavault syncs accounting. It does not charge senior exits, it does not apply to losses, and it is separate from the senior-to-junior protection premium.

Curator fee

Curators can configure management and performance fees on the wrapped underlying vault when that underlying supports them. Those fees are independent of the LayerCover tranche-level protocol fee and the protection premium.

Withdrawal fee (keeper reward)

If someone else executes a matured withdrawal, they receive a 5 bps keeper fee from the withdrawing LP’s redemption proceeds. If the LP executes themselves, no fee is paid.

This incentivises bots to execute matured notices promptly, and enables depositors to exit as soon as the notice has ended.

Quick reference